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Wednesday, September 11, 2013

The Things you can do to reduce your risk on the Stock Market

By Asante Isaac

Risk is inevitable in our journey to invest on the
stock market. The level of risk you bear determine the reward you might get. Is
it good to bear risk all the time? Alternatively, can risk be eliminated in
investment?

The term risk should not be bearing all the time nor
can it be eliminated. Our job hear is to find ways this risk can be reduced to
the bares minimum. The first thing we can do whenever we are on the stock
exchange is to avoid been greedy. Greedy is in two folds, that is, holding
stock to long to sell and trying to make quick profit.

Non-greedy investors have their cap rate/percentage
for which they use to get out of the market. Never believe that holding on to
non-performing stock will dramatically change things. You are the master of
your financial success on the exchange. In this regard, sell your stock when it
reaches your upper ratio and opt-out when it fall below. You are not on the
exchange for nothing; you are there to make money. In view of this, do not
entertain anything that fall short of your threshold.

The act of making quick profit is equivalent to
speculation as well as gets rich quick mantra. When you know yourself to be a
conservative in your investment strategy, do not dabble in speculative
investments you do not understand. In addition, when you know you are tortoise
do not ran the race of rabbit. Most people deceive themselves of making big
brake by taking chances. The investment mantra that says higher gains go with
higher risk cannot be overruled.

Another quickest way to reduce the risk factor in
your investment is to accept your bad judgments and make amends. I can equate
most of us to a driver whose car is going into a ditch and he has no way to
stop it. We usually allow little financial mistake to consume our mind to the
extent that we hardly stop it. What you need to do here is to examine the error
and estimate why such error came about. This will mean going back to your
drawing board to review your calculations because it could be that the market
is wrong or you are wrong. When it turns out that you are wrong, do not
hesitate to opt-out. Do not hold on because there is an impending dividend
payout.

The last thing you should do is to develop tick skin
so that the little risk will not discourage you. This is because no matter
which level of investment you are you will bear risk in its various forms.
Starting out in investment is like how a child walks- they craw, sit, stand and
start few steps and fall and eventually master walking. Therefore, you been an
investor do not cry over the mess that has gone by. Above all, be objective. Be
flexible and do not be guilty of prejudices in stocks.